Unassociated Document


    STANDBY EQUITY DISTRIBUTION
AGREEMENT

     

    THIS AGREEMENT dated as of the
3rd
day of December, 2009 (this “Agreement”) between
PALADIN CAPITAL MANAGEMENT,
S.A., a corporation organized and existing under the laws of Panama (the
“Investor”),
and ENERJEX RESOURCES,
INC., a Nevada corporation (the “Company”).

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, from time to time as provided herein, and
the Investor shall purchase from the Company up to 1,300,000 shares (subject to
adjustment as provided herein) of the Company’s common stock, par value $0.001
per share (the “Common
Stock”); and

     

    WHEREAS, such investments will
be made in reliance upon the provisions of Regulation D (“Regulation D”) of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act”), and
or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the
transactions to be made hereunder.

     

    NOW, THEREFORE, the parties hereto
agree as follows:

     

    Article
I. Certain Definitions

     

    Section
1.01 “Advance” shall mean
the portion of the Commitment Amount requested by the Company in the Advance
Notice.

     

    Section
1.02 “Advance
Date” shall mean the 1st Trading Day after expiration of the applicable
Pricing Period for each Advance.

     

    Section
1.03 “Advance
Notice” shall mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the amount of the Advance that the Company requests from the
Investor.

     

    Section
1.04 “Advance
Notice Date” shall mean each date the Company delivers (in accordance
with Section 2.01(b) of this Agreement) to the Investor an Advance Notice
requiring the Investor to advance funds to the Company, subject to the terms of
this Agreement.

     

    Section
1.05 “Affiliate” shall have
the meaning set forth in Section 3.08.

     

    Section
1.06 “Articles of
Incorporation” shall have the meaning set forth in Section
4.03.

     

    Section
1.07 “Bylaws” shall have
the meaning set forth in Section 4.03.

     

    Section
1.08 “Closing
Price” shall mean, on any date, the closing price (as reported by
Bloomberg L.P.) of the Common Stock on the Principal Market or if the Common
Stock is not traded on a Principal Market, the highest reported closing price
for the Common Stock, as furnished by the Financial Industry Regulatory
Authority or the “Pink Sheets”.

     

    
      
        
        

      

      
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    Section
1.09 “Commitment
Amount” shall mean 1,300,000 shares of Common Stock which the Investor
has agreed to purchase from the Company pursuant to the terms and conditions of
this Agreement provided
that, if prior to the
purchase by the Investor of the entire Commitment Amount (i) additional shares
of Common Stock are issued or issuable as a result of a stock split or stock
dividend, the remaining portion of the Commitment Amount will be adjusted to
include such additional securities resulting from the stock split or stock
dividend or (ii) the Common Stock is combined by a reverse split into a lesser
number of shares of Common Stock, the remaining portion of the Commitment Amount
will be proportionally reduced.

     

    Section
1.10 “Commitment
Fee” shall have the meaning set forth in Section 12.04(a).

     

    Section
1.11 “Commitment
Period” shall mean the period commencing on the Effective Date, and
expiring upon the termination of this Agreement in accordance with Section
10.02.

     

    Section
1.12 “Commitment
Shares” shall have the meaning set forth in Section
12.04(a).

     

    Section
1.13 “Common
Stock” shall have the meaning set forth in the recitals of this
Agreement.

     

    Section
1.14 “Company
Indemnitees” shall have the meaning set forth in Section
5.02.

     

    Section
1.15 “Condition
Satisfaction Date” shall have the meaning set forth in Section
7.01.

     

    Section
1.16 “Consolidation Event”
shall have the meaning set forth in Section 6.06.

     

    Section
1.17 “Damages” shall mean
any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorney’s fees and disbursements and costs and expenses
of expert witnesses and investigation).

     

    Section
1.18 “Effective
Date” shall mean the date on which the SEC first declares effective a
Registration Statement registering the resale of the Shares.

     

    Section
1.19 “Environmental Laws”
shall have the meaning set forth in Section 4.10.

     

    Section
1.20 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

     

    Section
1.21 “Indemnified
Liabilities” shall have the meaning set forth in Section
5.01.

     

    Section
1.22 “Inspectors” shall
have the meaning set forth in Section 6.16.

    


    
      
        
        

      

      
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    Section
1.23 “Investor
Indemnitees” shall have the meaning set forth in Section
5.01.

     

    Section
1.24 “Market
Price” shall mean the lowest daily VWAP of the Common Stock during the
relevant Pricing Period.

     

    Section
1.25 “Material
Adverse Effect” shall mean any condition, circumstance, or situation that
may result in, or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of this Agreement or the
transactions contemplated herein, (ii) a material adverse effect on the results
of operations, assets, business or condition (financial or otherwise) of the
Company, taken as a whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its obligations
under this Agreement.

     

    Section
1.26 “Maximum
Advance Amount” shall be, with the exception of the initial two advances
as set forth in Section 2.01(b), the greater of (i) $40,000, or (ii) 20% of the
average of the Daily Value Traded for each of the 5 Trading Days prior to the
Advance Notice Date where Daily Value Traded is the product obtained by
multiplying the daily trading volume for such day by the Closing Price for such
day.

     

    Section
1.27 “Ownership
Limitation” shall have the meaning set forth in Section
2.01(a).

     

    Section
1.28 “Person” shall mean an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

     

    Section
1.29 “Plan of
Distribution” shall have the meaning set forth in Section
6.01(a).

     

    Section
1.30 “Pricing
Period” shall mean the 5 consecutive Trading Days after the Advance
Notice Date Section 2.01(d).

     

    Section
1.31 “Principal
Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, the OTC Bulletin Board, the NYSE Euronext or
the New York Stock Exchange, whichever is at the time the principal trading
exchange or market for the Common Stock.

     

    Section
1.32 “Purchase
Price” shall be set at (i) 95% of the Market Price to the extent the
Common Stock is trading at or above $2.00 per share during the Pricing Period,
(ii) 92% of the Market Price to the extent the Common Stock is trading at or
above $1.00 per share during the Pricing Period, (iii) 90% of the Market Price
to the extent the Common Stock is trading below $1.00 per share during the
Pricing Period, or (iv) 85% of the Market Price for the initial two
advances.

     

    Section
1.33 “Records” shall have
the meaning set forth in Section 6.16.

     

    
      
        
        

      

      
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    Section
1.34 “Registrable
Securities” shall mean (i) the Shares, and (ii) any securities issued or
issuable with respect to any of the foregoing by way of exchange, stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise.  As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) the Registration Statement has been declared
effective by the SEC and such Registrable Securities have been disposed of
pursuant to the Registration Statement, (b) such Registrable Securities have
been sold under circumstances under which all of the applicable conditions of
Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule 144”)
are met, or (c) in the opinion of counsel to the Company such Registrable
Securities may permanently be sold without registration or without any time,
volume or manner limitations pursuant to Rule 144.

     

    Section
1.35 “Registration Period”
shall have the meaning set forth in Section 6.01(b).

     

    Section
1.36 “Registration
Statement” shall mean a registration statement on Form S-1 or Form S-3 or
on such other form promulgated by the SEC for which the Company then qualifies
and which counsel for the Company shall deem appropriate, and which form shall
be available for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.

     

    Section
1.37 “Regulation
D” shall have the meaning set forth in the recitals of this
Agreement.

     

    Section
1.38 “SEC”
shall have the meaning set forth in the recitals of this Agreement.

     

    Section
1.39 “SEC
Documents” shall have the meaning set forth in Section 4.05.

     

    Section
1.40 “Securities
Act” shall have the meaning set forth in the recitals of this
Agreement.

     

    Section
1.41 “Settlement
Document” shall have the meaning set forth in Section
2.02(a).

     

    Section
1.42 “Shares” shall mean
the Commitment Amount and the Commitment Shares.

     

    Section
1.43 “Trading
Day” shall mean any day during which the Principal Market shall be open
for business.

     

    Section
1.44 “VWAP” means, for any
date, the daily volume weighted average price of the Common Stock for such date
on the Principal Market as reported by Bloomberg L.P. (based on a Trading Day
from 9:00 a.m. (New York City time) to 4:00 p.m. (New York City
time)).

     

    
      
        
        

      

      
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    Article
II. Advances

     

    Section
2.01 Advances;
Mechanics. Subject to the terms and conditions of this Agreement
(including, without limitation, the provisions of Article VII hereof), the
Company, at its sole and exclusive option, may issue and sell to the Investor,
and the Investor shall purchase from the Company, shares of Common Stock on the
following terms:

    


    
      	
               (a)  
      

            	
              Advance
      Notice.  At any time during the Commitment Period, the
      Company may require the Investor to purchase Shares by delivering an
      Advance Notice to the Investor, subject to the conditions set forth in
      Section 7.01; provided, however, that (i) the amount for each Advance as
      designated by the Company in the applicable Advance Notice shall not be
      more than the Maximum Advance Amount, (ii) the aggregate amount of the
      Advances pursuant to this Agreement shall not exceed the Commitment
      Amount, and (iii) in no event shall the Advance cause the aggregate number
      of shares of Common Stock beneficially owned (as calculated pursuant to
      Section 13(d) of the Exchange Act) by the Investor and its affiliates to
      exceed 4.99% of the then outstanding Common Stock (the “Ownership
      Limitation”).  Notwithstanding any other provision in
      this Agreement, the Company acknowledges and agrees that upon receipt of
      an Advance Notice, the Investor may sell shares that it is unconditionally
      obligated to purchase under such Advance Notice prior to taking possession
      of such shares.

            
	 
      	 
      
	
              (b)  
      

            	
              Initial Two
      Advances. The initial two advances during the Commitment Period may
      be up to $55,000 each.

            


    

     

    
      	
              (c)  

            	
              Date of Delivery of
      Advance Notice.  Advance Notices shall be delivered in
      accordance with the instructions set forth on the bottom of Exhibit
      A.  An Advance Notice shall be deemed delivered on (i) the
      Trading Day it is received by facsimile or otherwise by the Investor if
      such notice is received prior to 5:00 pm Eastern Time, or (ii) the
      immediately succeeding Trading Day if it is received by facsimile or
      otherwise after 5:00 pm Eastern

            
	 
      	
              Time
      on a Trading Day or at any time on a day which is not a Trading
      Day.  No Advance Notice may be deemed delivered on a day that is
      not a Trading Day.

            


    

     

    
      	
              (d)  

            	
              Ownership
      Limitation.  In connection with each Advance Notice
      delivered by the Company, any portion of an Advance that would cause the
      Investor to exceed the Ownership Limitation shall automatically be
      withdrawn.

            


    

     

    
      	
              (e)  

            	
              Registration
      Limitation.  In connection with each Advance Notice, any
      portion of an Advance that would cause the aggregate number of Shares to
      exceed the aggregate number of shares of Common Stock available for resale
      under the Registration Statement shall automatically be deemed to be
      withdrawn by the Company with no further action required by the
      Company.  At the Company’s request from time to time, the
      Investor shall report to the Company the total amount of Shares offered
      and sold pursuant to this Agreement and the portion of the total
      Commitment Amount remaining.

            


    

     

    
      
        
        

      

      
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    Section
2.02 Closings.  Each
Closing shall take place as soon as practicable after each Advance Date in
accordance with the procedures set forth below.  In connection with each
Closing the Company and the Investor shall fulfill each of its obligations as
set forth below:

     

    
      	
              (a)  

            	
              Within
      1 Trading Day after each Advance Date, the Investor shall deliver to the
      Company a written document (each a “Settlement
      Document”) setting forth (i) the number of Shares to be purchased
      by the Investor pursuant to the Advance (taking into account any
      adjustments pursuant to Section 2.01(d) or Section 2.01(e)), (ii) the
      Purchase Price for the Advance, (iii) the Market Price for such Advance
      (as supported by a report by Bloomberg, LP indicating the VWAP for each of
      the Trading Days during the Pricing Period) and (iv) the amount payable to
      the Company (which shall equal the number of Shares to be purchased
      pursuant to such Advance (as specified in the relevant Advance Notice and
      taking into account any adjustments pursuant to Section 2.01(d) or Section
      2.01(e)), multiplied by the Purchase Price), in each case taking into
      account the terms and conditions of this Agreement.  The
      Settlement Document shall be in the form attached hereto as Exhibit
B.

            


    

     

    
      	
              (b)  

            	
              Upon
      receipt of the Settlement Document with respect to each Advance, the
      Company shall confirm that it has obtained all material permits and
      qualifications required for the issuance and transfer of the shares of
      Common Stock applicable to such Advance, or shall have the availability of
      exemptions therefrom and that the sale and issuance of such shares of
      Common Stock shall be legally permitted by all laws and regulations to
      which the Company is subject.

            


    

     

    
      	
              (c)  

            	
              Promptly
      after receipt of the Settlement Document with respect to each Advance
      (and, in any event, not later than three Trading Days after each Advance
      Date), the Company will, or will cause its transfer agent to,
      electronically transfer the Shares being issued and sold pursuant to the
      Advance registered in the name of the Investor by crediting the Investor’s
      account or its designee’s account at the Depository Trust Company through
      its Deposit Withdrawal Agent Commission System or by such other means of
      delivery as may be mutually agreed upon by the parties hereto (which in
      all cases shall be freely tradable, registered shares in good deliverable
      form) against payment of the Purchase Price in same day funds to an
      account designated by the Company.  Any certificates evidencing
      shares of Common Stock delivered pursuant hereto shall be free of
      restrictive legends.

            
	 
      	 
      


    

     

    
      	
              (d)  

            	
              On
      or prior to the Advance Date, each of the Company and the Investor shall
      deliver to the other all documents, instruments and writings required to
      be delivered by either of them pursuant to this Agreement in order to
      implement and effect the transactions contemplated
  herein.

            


    

      

    Article
III. Representations and Warranties of Investor

     

    Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof:

    


    
      
        
        

      

      
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    Section
3.01 Organization
and Authorization.  The Investor is duly organized, validly
existing and in good standing under the laws of Panama and has all requisite
power and authority to purchase and hold the Shares.  The decision to
invest and the execution and delivery of this Agreement by such Investor, the
performance by such Investor of its obligations hereunder and the consummation
by such Investor of the transactions contemplated hereby have been duly
authorized and requires no other proceedings on the part of the
Investor.  The undersigned has the right, power and authority to
execute and deliver this Agreement and all other instruments on behalf of the
Investor.  This Agreement has been duly executed and delivered by the
Investor and, assuming the execution and delivery hereof and acceptance thereof
by the Company, will constitute the legal, valid and binding obligations of the
Investor, enforceable against the Investor in accordance with its
terms.

     

    Section
3.02 Evaluation
of Risks.  The Investor has such knowledge and experience in
financial, tax and business matters as to be capable of evaluating the merits
and risks of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this
transaction.  It recognizes that its investment in the Company
involves a high degree of risk.

     

    Section
3.03 No Legal
Advice From the Company.  The Investor acknowledges that it had
the opportunity to review this Agreement and the transactions contemplated by
this Agreement with its own legal counsel and investment and tax
advisors.  The Investor is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of the
Company’s representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction.

     

    Section
3.04 Investment
Purpose. The securities are being purchased by the Investor for its own
account, and for investment purposes.  The Investor agrees not to
assign or in any way transfer the Investor’s rights to the securities or any
interest therein and acknowledges that the Company will not recognize any
purported assignment or transfer except in accordance with applicable Federal
and state securities laws.  No other person has or will have a direct
or indirect beneficial interest in the securities.  The Investor
agrees not to sell, hypothecate or otherwise transfer the Investor’s securities
unless the securities are registered under Federal and applicable state
securities laws or unless, in the opinion of counsel satisfactory to the
Company, an exemption from such laws is available.

     

    Section
3.05 Accredited
Investor.  The Investor is an “Accredited Investor”
as that term is defined in Rule 501(a)(3) of Regulation D of the Securities
Act.

     

    Section
3.06 Information.  The
Investor and its advisors (and its counsel), if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment
decision.  The Investor and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and its
management.  Neither such inquiries nor any other due diligence
investigations conducted by such Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained in this
Agreement.  The Investor understands that its investment involves a
high degree of risk.  The Investor is in a position regarding the
Company, which, based upon employment, family relationship or economic
bargaining power, enabled and enables such Investor to obtain information from
the Company in order to evaluate the merits and risks of this
investment.  The Investor has sought such accounting, legal and tax
advice, as it has considered necessary to make an informed investment decision
with respect to this transaction.

     

    
      
        
        

      

      
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    Section
3.07 No General
Solicitation.  Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the shares of Common
Stock offered hereby.

     

    Section
3.08 Not an
Affiliate.  The Investor is not an officer, director or a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with the Company or any “Affiliate” of the
Company (as that term is defined in Rule 405 of the Securities
Act).

     

    Section
3.09 Trading
Activities.  The Investor’s trading activities with respect to
the Company’s Common Stock shall be in compliance with all applicable federal
and state securities laws, rules and regulations and the rules and regulations
of the Principal Market on which the Common Stock is listed or
traded.  Neither the Investor nor its affiliates has an open short
position in the Common Stock, the Investor agrees that it shall not, and that it
will cause its affiliates not to, engage in any short sales of the Common Stock
provided that the
Company acknowledges and agrees that upon receipt of an Advance Notice the
Investor has the right to sell

    the
shares to be issued to the Investor pursuant to the Advance Notice prior to
receiving such shares.

     

    Article
IV. Representations and Warranties of the Company

     

    Except as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents, the Company hereby represents and warrants to, the Investor that the
following are true and correct as of the date hereof:

     

    Section
4.01 Organization
and Qualification.  The Company is duly incorporated, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate power to own its properties and to carry on its business as
now being conducted.  Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.

     

    Section
4.02 Authorization, Enforcement,
Compliance with Other Instruments.  (i) The Company has the
requisite corporate power and authority to enter into and perform this Agreement
and any related agreements, in accordance with the terms hereof and thereof,
(ii) the execution and delivery of this Agreement and any related agreements by
the Company and the consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by the Company’s Board of Directors and
no further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) this Agreement and any related
agreements have been duly executed and delivered by the Company, (iv) this
Agreement and assuming the execution and delivery thereof and acceptance by the
Investor, any related agreements, constitute the valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.

     

    
      
        
        

      

      
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    Section
4.03 Capitalization.  The
authorized capital stock of the Company consists of 100,000,000 shares of Common
Stock $0.001 par value per share and 10,000,000 shares of Preferred Stock,
$0.001 par value per share (“Preferred Stock”), of
which 4,800,660 shares of Common Stock and no shares of Preferred Stock are
issued and outstanding.  All of such outstanding shares have been
validly issued and are fully paid and nonassessable.  Except as
disclosed in the SEC Documents, no shares of Common Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company.  Except as disclosed in the SEC
Documents, as of the date hereof, (i) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of its
subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (ii) there are no outstanding debt
securities (iii) there are no outstanding registration statements other
than on Form S-8 and Form S-1 and (iv) there are no agreements or arrangements
under which the Company or any of its subsidiaries is obligated to register the
sale of any of their securities under the Securities Act (except pursuant to
this Agreement). Except as disclosed in the SEC Documents, there are
no securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or the consummation
of the transactions described herein or therein.  The Company has
furnished or made available to the Investor true and correct copies of the
Company’s Articles of Incorporation, as amended and as in effect on the date
hereof (the “Articles
of Incorporation”), and the Company’s Bylaws, as in effect on the date
hereof (the “Bylaws”), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.

     

    Section
4.04 No
Conflict.  The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby will not (i) result in a violation of the Articles of
Incorporation, any certificate of designations of any outstanding series of
preferred stock of the Company or Bylaws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market on which the Common Stock is quoted) applicable to the Company
or any of its subsidiaries or by which any material property or asset of the
Company is bound or affected and which would cause a Material Adverse
Effect.  Except as disclosed in the SEC Documents, neither the Company
nor its subsidiaries is in violation of any term of or in default under its
Articles of Incorporation or Bylaws or their organizational charter or Bylaws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries.  The
business of the Company and its subsidiaries is not being conducted in violation
of any material law, ordinance or regulation of any governmental
entity.  Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof or thereof
except as such consent, authorization or order has been obtained prior to the
date hereof.  The Company and its subsidiaries are unaware of any fact
or circumstance which might give rise to any of the foregoing.

     

    
      
        
        

      

      
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    Section
4.05 SEC
Documents; Financial Statements.  The Common Stock is
registered pursuant to Section 12(g) of the Exchange Act and the Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC under the Exchange Act for the two years preceding
the date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (all of the foregoing filed within the two
years preceding the date hereof or amended after the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to as
the “SEC
Documents”) on timely basis or has received a valid extension of such
time of filing and has filed any such SEC Document prior to the expiration of
any such extension.  The Company has delivered to the Investors or
their representatives, or made available through the SEC’s website at
http://www.sec.gov, true and complete copies of the SEC Documents.  As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.  As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).  No other information provided by or on behalf of the
Company to the Investor which is not included in the SEC Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made and not misleading.

    


                Section
4.06 No
Default.  Except as disclosed in the SEC Documents, the Company
is not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound and neither the execution, nor the delivery
by the Company, nor the performance by the Company of its obligations under this
Agreement or any of the exhibits or attachments hereto will conflict with or
result in the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under its Articles of
Incorporation, Bylaws, any material indenture, mortgage, deed of trust or other
material agreement applicable to the Company or instrument to which the Company
is a party or by which it is bound, or any statute, or any decree, judgment,
order, rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect.

     

    Section
4.07 Absence of
Events of Default.  Except for matters described in the SEC
Documents and/or this Agreement, no Event of Default, as defined in the
respective agreement to which the Company is a party, and no event which, with
the giving of notice or the passage of time or both, would become an Event of
Default (as so defined), has occurred and is continuing, which would have a
Material Adverse Effect.

     

    Section
4.08 Intellectual
Property Rights.  The Company and its subsidiaries own or
possess adequate rights or licenses to use all material trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted.   The Company and its subsidiaries
do not have any knowledge of any infringement by the Company or its subsidiaries
of trademark, trade name rights, patents, patent rights, copyrights, inventions,
licenses, service names, service marks, service mark registrations, trade secret
or other similar rights of others, and, to the knowledge of the Company, there
is no claim, action or proceeding being made or brought against, or to the
Company’s knowledge, being threatened against the Company or its subsidiaries
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark registrations, trade secret
or other infringement; and the Company is and its subsidiaries are not aware of
any facts or circumstances which might give rise to any of the
foregoing.

     

    Section
4.09 Employee
Relations.  Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened.  None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with employees are good.

     

    
      
        
        

      

      
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    Section
4.10 Environmental
Laws.  The Company and its subsidiaries are (i) in compliance
with any and all applicable material foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”),
(ii) have received all permits, licenses or other approvals required under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval.

     

    Section
4.11 Title.  Except
as set forth in the SEC Documents, the Company has good and marketable title to
its properties and material assets owned by it, free and clear of any pledge,
lien, security interest, encumbrance, claim or equitable interest other than
such as are not material to the business of the Company.  Any real
property and facilities held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries.

     

    Section
4.12 Insurance.  The
Company and each of its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its subsidiaries are engaged.  Neither the
Company nor any such subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect.

     

    Section
4.13 Regulatory
Permits.  The Company and each of its subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

     

    Section
4.14 Internal
Accounting Controls.  The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

     

    Section
4.15 No Material
Adverse Breaches, etc.  Except as set forth in the SEC
Documents, neither the Company nor any of its subsidiaries is subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company’s officers has or is
expected in the future to have a Material Adverse Effect.  Except as
set forth in the SEC Documents, neither the Company nor any of its subsidiaries
is in breach of any contract or agreement which breach, in the judgment of the
Company’s officers, has or is expected to have a Material Adverse Effect on the
business, properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.

    


    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

       

    

    Section
4.16 Absence of
Litigation.  Except as set forth in the SEC Documents, there is
no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company’s
subsidiaries, wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect.

     

    Section
4.17 Subsidiaries.  Except
as disclosed in the SEC Documents, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.

     

    Section
4.18 Tax
Status.  Except as disclosed in the SEC Documents, the Company
and each of its subsidiaries has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of its subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.

     

    Section
4.19 Certain
Transactions.  Except as set forth in the SEC Documents none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

     

    Section
4.20 Fees and
Rights of First Refusal.  The Company is not obligated to offer
the securities offered hereunder on a right of first refusal basis or otherwise
to any third parties including, but not limited to, current or former
shareholders of the Company, underwriters, brokers, agents or other third
parties.

     

    Section
4.21 Use of
Proceeds.  The Company shall use the net proceeds from this
offering for working capital and other general corporate purposes.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

       

    

    Section
4.22 Dilution.  The
Company is aware and acknowledges that issuance of shares of the Common Stock
could cause dilution to existing shareholders and could significantly increase
the outstanding number of shares of Common Stock.

    


    Section
4.23 Acknowledgment Regarding
Investor’s Purchase of Shares. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of an arm’s length investor with
respect to this Agreement and the transactions contemplated hereunder. The
Company further acknowledges that the Investor is not acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
this Agreement and the transactions contemplated hereunder and any advice given
by the Investor or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereunder is merely incidental to
the Investor’s purchase of the Shares hereunder.  The Company is aware
and acknowledges that it may not be able to request Advances under this
Agreement if the Registration Statement is not declared effective or if any
issuances of Common Stock pursuant to any Advances would violate any rules of
the Principal Market.  The Company further is aware and acknowledges
that any fees paid or shares issued pursuant to Section 12.04 hereunder or shall
be earned on the date hereof and not refundable or returnable under any
circumstances.

     

    Article
V. Indemnification

     

    The
Investor and the Company represent to the other the following with respect to
itself:

     

    Section
5.01 In consideration of the Investor’s execution and delivery of this
Agreement, and in addition to all of the Company’s other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold harmless the
Investor, and all of its officers, directors, partners, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Investor
Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Investor Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement for
the registration of the Shares as originally filed or in any amendment thereof,
or in any related prospectus, or in any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Investor specifically for inclusion therein;
(b) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement or any other certificate, instrument or document
contemplated hereby or thereby; (c) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; and (d) any cause of
action, suit or claim brought or made against such Investor Indemnitee not
arising out of any action or inaction of an Investor Indemnitee, and arising out
of or resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Investor Indemnitees.  To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities, which is permissible under applicable
law.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

       

    

    Section
5.02 In consideration of the Company’s execution and delivery of this
Agreement, and in addition to all of the Investor’s other obligations under this
Agreement, the Investor shall defend, protect, indemnify and hold harmless the
Company and all of its officers, directors, shareholders, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement for the registration of the Shares as originally
filed or in any amendment thereof, or in any related prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; provided, however, that the
Investor will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Investor by or on behalf of the Company specifically for inclusion therein;
(b) any misrepresentation or breach of any representation or warranty made by
the Investor in this Agreement or any instrument or document contemplated hereby
or thereby executed by the Investor; (c) any breach of any covenant, agreement
or obligation of the Investor(s) contained in this Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed by
the Investor; or (d) any cause of action, suit or claim brought or made against
such Company Indemnitee not arising out of any action or inaction of a Company
Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other instrument, document
or agreement executed pursuant hereto by any of the Company
Indemnitees.  To the extent that the foregoing undertaking by the
Investor may be unenforceable for any reason, the Investor shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

     

    Section
5.03 Promptly after receipt by an Investor Indemnitee or Company Indemnitee
under this Article V of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified
Liability, such Investor Indemnitee or Company Indemnitee shall, if an
Indemnified Liability in respect thereof is to be made against any indemnifying
party under this Article V deliver to the indemnifying party a written notice of
the commencement thereof; but the failure to so notify the indemnifying party
will not relieve it of liability under this Article V unless and to the extent
the indemnifying party did not otherwise learn of such action and such failure
result in the forfeiture by the indemnifying party of substantial rights and
defenses and will not, in any event, relieve the indemnifying party from any
obligations provided in this Article V.  The indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Investor Indemnitee or Company Indemnitee, as the
case may be; provided, however, that an Investor Indemnitee or Company
Indemnitee shall have the right to retain its own counsel with the fees and
expenses of not more than one counsel for such Investor Indemnitee or Company
Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the Investor Indemnitee or Company Indemnitee and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Investor Indemnitee or Company Indemnitee and any other party
represented by such counsel in such proceeding. The Investor Indemnitee or
Company Indemnitee shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Investor Indemnitee or Company Indemnitee which
relates to such action or claim.  The indemnifying party shall keep
the Investor Indemnitee or Company Indemnitee fully apprised at all times as to
the status of the defense or any settlement negotiations with respect
thereto.  No indemnifying party shall be liable for any settlement of
any action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall, without
the prior written consent of the Investor Indemnitee or Company Indemnitee,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee of a
release from all liability in respect to such claim or
litigation.  Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Investor Indemnitee
or Company Indemnitee with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made.

     

    
      
        
        

      

      
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    Section
5.04 The indemnification required by this Article V shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received.

     

    Section
5.05 The indemnity agreements contained herein shall be in addition to (i)
any cause of action or similar right of the Investor Indemnitee or Company
Indemnitee against the indemnifying party or others, and (ii) any liabilities
the indemnifying party may be subject to pursuant to the law.

     

    Section
5.06 The obligations of the parties to indemnify or make contribution under
this Article V shall survive termination.

      

    Article
VI. Covenants of the Company

     

    Section
6.01 Registration
Statement.

     

    
      	
              (a)  

            	
              Filing of a
      Registration Statement.  The Company shall prepare and
      file with the SEC a Registration Statement, or multiple Registration
      Statements for the resale by the Investor of the Registrable
      Securities.  The Company in its sole discretion may choose when
      to file such Registration Statements; provided, however, that
      the Company shall not have the ability to request any Advances until the
      effectiveness of a Registration Statement.  Each Registration
      Statement shall contain the “Plan of
      Distribution” section in substantially the form attached hereto as
      Exhibit
      C.

            


    

     

    
      	
              (b)  

            	
              Maintaining a
      Registration Statement.  The Company shall cause any
      Registration Statement that has been declared effective to remain
      effective at all times until all Registrable Securities contained in such
      Registration Statement cease to be Registrable Securities (the “Registration
      Period”).  Each Registration Statement (including any
      amendments or supplements thereto and prospectuses contained therein)
      shall not contain any untrue statement of a material fact or omit to state
      a material fact required to be stated therein, or necessary to make the
      statements therein, in light of the circumstances in which they were made,
      not misleading.

            


    

     

    
      	
              (c)  

            	
              Filing
      Procedures.  Prior to the filing of any Registration
      Statement with the SEC, the Company shall, (i) furnish a draft of such
      Registration Statement to the Investor for its review and comment and (ii)
      not less than three business days prior to the filing of a Registration
      Statement and not less than one business day prior to the filing of any
      related amendments and supplements to all Registration Statements (except
      for any amendments or supplements caused by the filing of any annual
      reports on Form 10-K, quarterly reports on Form 10-Q and periodic reports
      on Form 8-K), furnish to the Investor copies of all such documents
      proposed to be filed, which documents (other than those incorporated or
      deemed to be incorporated by reference) will be subject to the reasonable
      and prompt review of the Investor.  The Investor shall furnish
      comments on a Registration Statement to the Company within 24 hours of the
      receipt thereof.

            


    

     

    
      	
              (d)  

            	
              Delivery of Final
      Documents.  The Company shall furnish to the Investor
      without charge, (i) at least one copy of such Registration Statement as
      declared effective by the SEC and any amendment(s) thereto, including
      financial statements and schedules, all documents incorporated therein by
      reference, all exhibits and each preliminary prospectus, (ii) at the
      request of the Investor, 10 copies of the final prospectus included in
      such Registration Statement and all amendments and supplements thereto (or
      such other number of copies as the Investor may reasonably request) and
      (iii) such other documents as the Investor may reasonably request from
      time to time in order to facilitate the disposition of the Registrable
      Securities owned by the Investor.

            


    

     

    
      	
              (e)  

            	
              Amendments and Other
      Filings.  The Company shall (i) prepare and file with the
      SEC such amendments (including post-effective amendments) and
      supplements to a Registration Statement and the related prospectus used in
      connection with such Registration Statement, which prospectus is to be
      filed pursuant to Rule 424 promulgated under the Securities Act, as may be
      necessary to keep such Registration Statement effective at all times
      during the Registration Period, and prepare and file with the SEC such
      additional Registration Statements in order to register for resale under
      the Securities Act all of the Registrable Securities; (ii) cause the
      related prospectus to be amended or supplemented by any required
      prospectus supplement (subject to the terms of this Agreement), and as so
      supplemented or amended to be filed pursuant to Rule 424; (iii) provide
      the Investor copies of all correspondence from and to the SEC relating to
      a Registration Statement (provided that the Company may excise any
      information contained therein which would constitute material non-public
      information, and (iv) comply with the provisions of the Securities Act
      with respect to the disposition of all Registrable Securities of the
      Company covered by such Registration Statement until such time as all of
      such Registrable Securities shall have been disposed of in accordance with
      the intended methods of disposition by the seller or sellers thereof as
      set forth in such Registration Statement.  In the case of
      amendments and supplements to a Registration Statement which are required
      to be filed pursuant to this Agreement (including pursuant to this Section
      6.01(e)) by reason of the Company’s filing a report on Form 10-K, Form
      10-Q or Form 8-K or any analogous report under the Exchange Act, the
      Company shall incorporate such report by reference into the Registration
      Statement, if applicable, or shall file such amendments or supplements
      with the SEC either on the day on which the Exchange Act report is filed
      which created the requirement for the Company to amend or supplement the
      Registration Statement, if feasible, or otherwise promptly
      thereafter.

            


    

     

    
      
        
        

      

      
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              (f)  

            	
              Blue-Sky.  The Company shall use
      its best efforts to (i) register and qualify the Registrable Securities
      covered by a Registration Statement under such other securities or “blue
      sky” laws of such jurisdictions in the United States as the Investor
      reasonably requests, (ii) prepare and file in those jurisdictions,
      such amendments (including post-effective amendments) and supplements to
      such registrations and qualifications as may be necessary to maintain the
      effectiveness thereof during the Registration Period, (iii) take such
      other actions as may be necessary to maintain such registrations and
      qualifications in effect at all times during the Registration Period, and
      (iv) take all other actions reasonably necessary or advisable to qualify
      the Registrable Securities for sale in such jurisdictions; provided,
      however, that the Company shall not be required in connection therewith or
      as a condition thereto to (w) make any change to its articles of
      incorporation or Bylaws, (x) qualify to do business in any jurisdiction
      where it would not otherwise be required to qualify but for this Section
      6.01(f), (y) subject itself to general taxation in any such jurisdiction,
      or (z) file a general consent to service of process in any such
      jurisdiction.  The Company shall promptly notify the Investor of
      the receipt by the Company of any notification with respect to the
      suspension of the registration or qualification of any of the Registrable
      Securities for sale under the securities or “blue sky” laws of any
      jurisdiction in the United States or its receipt of actual notice of the
      initiation or threat of any proceeding for such
  purpose.

            


    

     

    Section
6.02 Listing of
Common Stock.  The Company shall at all times maintain the
Common Stock’s authorization for quotation on the Principal Market.

      

    Section
6.03 Exchange Act
Registration.  The Company will cause its Common Stock to
continue to be registered under Section 12(g) of the Exchange Act, will file in
a timely manner all reports and other documents required of it as a reporting
company under the Exchange Act and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act.

     

    Section
6.04 Transfer
Agent Instructions.  Upon effectiveness of the Registration
Statement the Company shall deliver instructions to its transfer agent to issue
shares of Common Stock to the Investor free of restrictive legends on or before
each Advance Date.

     

    Section
6.05 Corporate
Existence.  The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.

     

    Section
6.06 Notice of
Certain Events Affecting Registration; Suspension of Right to Make an
Advance.  The Company will immediately notify the Investor, and
confirm in writing, upon its becoming aware of the occurrence of any of the
following events in respect of a Registration Statement or related prospectus
relating to an offering of Registrable Securities: (i) receipt of any request
for additional information by the SEC or any other Federal or state governmental
authority during the period of effectiveness of the Registration Statement for
amendments or supplements to the Registration Statement or related prospectus;
(ii) the issuance by the SEC or any other Federal or state governmental
authority of  any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus of any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or of the necessity to amend the
Registration Statement or supplement a related prospectus to comply with the
Securities Act or any other law; and (v) the Company’s reasonable determination
that a post-effective amendment to the Registration Statement would be
appropriate; and the Company will promptly make available to the Investor any
such supplement or amendment to the related prospectus.  The Company
shall not deliver to the Investor any Advance Notice, and the Investor shall not
sell any Shares pursuant to a Registration Statement, during the continuation of
any of the foregoing events.

     

    Section
6.07 Consolidation;
Merger.  If an Advance Notice has been delivered to the
Investor and the transaction contemplated in such Advance Notice has not yet
been closed in accordance with Section 2.02 hereof, then the Company shall not
effect any merger or consolidation of the Company with or into, or a transfer of
all or substantially all the assets of the Company to another entity (a “Consolidation
Event”).

      

    Section
6.08 Issuance of
the Company’s Common Stock.  The sale of the shares of Common
Stock hereunder shall be made in accordance with the provisions and requirements
of Regulation D and any applicable state securities law.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

       

    

    Section
6.09 Review of
Public Disclosure.  All SEC filings (including without
limitation, all filings required under the Exchange Act, which include Forms
10-Q, 10-K, 8-K, etc.) and other public disclosures made by the Company,
including, without limitation, all press releases, investor relations materials,
and scripts of analysts meetings and calls, shall be reviewed and approved for
release by the Company’s attorneys and if containing financial information, the
Company’s independent certified public accountants.

     

    Section
6.10 Market
Activities. The Company will not, directly or indirectly, take any
action designed to cause or result in, or that constitutes or might reasonably
be expected to constitute, the stabilization or manipulation of the price of any
security of the Company under Regulation M of the Exchange Act.

     

    Section
6.11 Opinion of
Counsel Concerning Resales.  Provided that the Investor’s
resale of Common Stock received pursuant to this Agreement may be freely sold by
the Investor either pursuant to an effective Registration Statement, in
accordance with Rule 144, or otherwise, the Company shall obtain for the
Investor, at the Company’s expense, any and all opinions of counsel which may be
required by the Company’s transfer agent to issue such shares free of
restrictive legends, or to remove legends from such shares.

     

    Section
6.12 Expenses.  The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay all expenses incident to the
performance of its obligations hereunder, including but not limited to (i) the
preparation, printing and filing of the Registration Statement and each
amendment and supplement thereto, of each prospectus and of each amendment and
supplement thereto; (ii) the preparation, issuance and delivery of any Shares
issued pursuant to this Agreement, (iii) all fees and disbursements of the
Company’s counsel, accountants and other advisors, (iv) the qualification of the
Shares under securities laws in accordance with the provisions of this
Agreement, including filing fees in connection therewith, (v) the printing and
delivery of copies of any prospectus and any amendments or supplements thereto,
(vi) the fees and expenses incurred in connection with the listing or
qualification of the Shares for trading on the Principal Market, or (vii) filing
fees of the SEC and the Principal Market.

     

    Section
6.13 Sales.  Without
the written consent of the Investor, the Company will not, directly or
indirectly, offer to sell, sell, contract to sell, grant any option to sell or
otherwise dispose of any shares of Common Stock (other than the Shares offered
pursuant to the provisions of this Agreement) or securities convertible into or
exchangeable for Common Stock, warrants or any rights to purchase or acquire,
Common Stock during the period beginning on the 5th Trading Day immediately
prior to an Advance Notice Date and ending on the 5th Trading Day immediately
following the corresponding Advance Date.

     

    Section
6.14 Current
Report.  Promptly after the date hereof (and prior to the
Company delivering an Advance Notice to the Investor hereunder), the Company
shall file with the SEC a report on Form 8-K or such other appropriate form as
determined by counsel to the Company, relating to the transactions contemplated
by this Agreement and shall provide the Investor with a reasonable opportunity
to review such report prior to its filing.

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

       

    

    Section
6.15 Compliance
With Laws.  The Company will not, directly or indirectly, take
any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company or which caused or resulted in, or which
would in the future reasonably be expected to cause or result in, stabilization
or manipulation of the price of any security of the Company.

     

    Section
6.16 Due
Diligence.  From time to time, at the request of the Investor,
the Company shall make available for inspection by (i) the Investor and
(ii)  one firm of accountants or other agents retained by the Investor
(collectively, the “Inspectors”) all
pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall
be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree, and
the Investor hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to an Investor) or use any Record or other information which
the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the Securities Act, (b)
the release of such Records is ordered pursuant to a final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available to the
public other than by disclosure in violation of this or any other agreement of
which the Inspector and the Investor has knowledge.  The Investor
agrees that it shall, upon learning that disclosure of such Records is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.

     

    Section
6.17 Comfort
Letters.  From time to time, at the request of the Investor,
the Company will cause its independent accountants to furnish to the Investor a
letter in form and substance reasonably satisfactory to the Investor, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements of
the Company and the Company shall deliver additional “comfort letters” promptly
after (i) the date the Registration Statement or any prospectus shall be amended
or supplemented (other than (1) in connection with the filing of a prospectus
supplement that contains solely information relating to the number of shares
sold by the Investor pursuant to the Registration Statement (2) in connection
with the filing of any report or other document under Section 13, 14 or
15(d) of the Exchange Act, or (3) by a prospectus supplement relating to
the offering of other securities (including, without limitation, other shares of
Common Stock)) (each such date, a “Registration Statement
Amendment Date”) and (ii) the date of filing or amending each Annual
Report on Form 10-K or Quarterly Report on Form 10-Q for a period in which an
Advance was delivered pursuant to this Agreement and which are incorporated by
reference in the Registration Statement (each such date, a “Company Periodic Report
Date”).

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

     

    Article
VII. Conditions for Advance and Conditions to Closing

     

    Section
7.01 Conditions
Precedent to the Right of the Company to Deliver an Advance
Notice.  The right of the Company to deliver an Advance Notice
and the obligations of the Investor hereunder with respect to an Advance is
subject to the satisfaction by the Company, on  each Advance Notice
Date and Advance Date (a “Condition Satisfaction
Date”), of each of the following conditions:

     

    
      	
              (a)  

            	
              Accuracy of the
      Company’s Representations and Warranties.  The
      representations and warranties of the Company shall be true and correct in
      all material respects.

            


    

     

    
      	
              (b)  

            	
              Registration of the
      Common Stock with the SEC.  There is an effective
      Registration Statement pursuant to which the Investor is permitted to
      utilize the prospectus thereunder to resell all of the shares of Common
      Stock issuable pursuant to such Advance Notice.  The Company
      shall have filed with the SEC in a timely manner all reports, notices and
      other documents required of a “reporting company” under the Exchange Act
      and applicable SEC regulations.

            


    

     

    
      	
              (c)  

            	
              Authority.  The
      Company shall have obtained all permits and qualifications required by any
      applicable state for the offer and sale of the shares of Common Stock, or
      shall have the availability of exemptions therefrom.  The sale
      and issuance of the shares of Common Stock shall be legally permitted by
      all laws and regulations to which the Company is
  subject.

            


    

     

    
      	
              (d)  

            	
              No Material
      Notices. None of the following events shall have occurred and be
      continuing:  (i) receipt by the Company of any request for
      additional information from the SEC or any other federal or state
      governmental, administrative or self regulatory authority during the
      period of effectiveness of the Registration Statement, the response to
      which would require any amendments or supplements to the Registration
      Statement or related prospectus; (ii) the issuance by the SEC or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of the Registration Statement or the initiation of any
      proceedings for that purpose; (iii) receipt by the Company of any
      notification with respect to the suspension of the qualification or
      exemption from qualification of any of the Registrable Securities for sale
      in any jurisdiction or the initiation or threatening of any proceeding for
      such purpose; (iv) the occurrence of any event that makes any statement
      made in the Registration Statement or related prospectus or any document
      incorporated or deemed to be incorporated therein by reference untrue in
      any material respect or that requires the making of any changes in the
      Registration Statement, related prospectus or documents so that, in the
      case of the Registration Statement, it will not contain any untrue
      statement of a material fact or omit to state any material fact required
      to be stated therein or necessary to make the statements therein not
      misleading, and that in the case of the related prospectus, it will not
      contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary to make the
      statements therein, in the light of the circumstances under and as of the
      date which they were made, not misleading; and (v) the Company’s
      reasonable determination that a post-effective amendment to the
      Registration Statement would be required. There shall not exist any
      fundamental changes to the information set forth in the Registration
      Statement which would require the Company to file a post-effective
      amendment to the Registration
Statement.

            


    

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    
      	
              (e)  

            	
              Performance by the
      Company.  The Company shall have performed, satisfied and
      complied in all material respects with all covenants, agreements and
      conditions required by this Agreement to be performed, satisfied or
      complied with by the Company at or prior to each Condition Satisfaction
      Date.

            


    

     

    
      	
              (f)  

            	
              No
      Injunction.  No statute, rule, regulation, executive
      order, decree, ruling or injunction shall have been enacted, entered,
      promulgated or endorsed by any court or governmental authority of
      competent jurisdiction that prohibits or directly and adversely affects
      any of the transactions contemplated by this Agreement, and no proceeding
      shall have been commenced that may have a Material Adverse
      Effect.

            


    

     

    
      	
              (g)  

            	
              No Suspension of
      Trading in or Delisting of Common Stock.  The
      Common Stock is trading on a Principal Market and all of the shares
      issuable pursuant to such Advance Notice will be listed or quoted for
      trading on such Principal Market and the Company believes, in good faith,
      that trading of the Common Stock on a Principal Market will continue
      uninterrupted for the foreseeable future.  The issuance of
      shares of Common Stock with respect to the applicable Advance Notice will
      not violate the shareholder approval requirements of the Principal
      Market.  The Company shall not have received any notice
      threatening the continued listing of the Common Stock on the Principal
      Market.

            


    

     

    
      	
              (h)  

            	
              Maximum Advance
      Amount.  The amount of an Advance requested by the
      Company shall not exceed the Maximum Advance
  Amount.

            


    

     

    
      	
              (i)  

            	
              Authorized.  There
      shall be a sufficient number of authorized but unissued and otherwise
      unreserved shares of Common Stock for the issuance of all of the shares
      issuable pursuant to such Advance
Notice.

            


    

     

    
      	
              (j)  

            	
              Executed Advance
      Notice.  The Investor shall have received the Advance
      Notice executed by an officer of the Company and the representations
      contained in such Advance Notice shall be true and correct as of each
      Condition Satisfaction Date.

            


    

     

    
      	
              (k)  

            	
              Comfort
      Letters.  The Company’s independent accounts shall have
      furnished to the Investor any letters requested pursuant to Section 6.17
      addressed to the Investor containing statements and information of the
      type ordinarily included in accountants’ “comfort letters” to underwriters
      with respect to the financial statements of the
  Company.

            


    

     

    
      	
              (l)  

            	
              Consecutive Advance
      Notices.  Except with respect to the first Advance
      Notice, the Company shall have delivered all Shares relating to all prior
      Advances.

            


    

     

    
      	
              (m)  

            	
              Consolidation
      Event.  The Company shall not have effected any merger or
      consolidation with or into, or a transfer of all or substantially all the
      assets of the Company to another
entity.

            


    

      

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    Article
VIII. Non-Disclosure of Non-Public Information

     

    The
Company covenants and agrees that it shall refrain from disclosing, and shall
cause its officers, directors, employees and agents to refrain from disclosing,
any material non-public information to the Investor without also disseminating
such information to the public, unless prior to disclosure of such information
the Company identifies such information as being material non-public information
and provides the Investor with the opportunity to accept or refuse to accept
such material non-public information for review.

     

    Article
IX. Choice of Law/Jurisdiction

     

    This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Nevada without regard to the principles of conflict of
laws.  The parties further agree that any action between them shall be
heard in Clark County, Nevada and expressly consent to the jurisdiction and
venue of the Superior Court of Nevada, sitting in Clark County, Nevada and the
United States District Court of Nevada, sitting in Las Vegas, Nevada for the
adjudication of any civil action asserted pursuant to the
paragraph.

     

    Article
X. Assignment; Termination

     

    Section
10.01 Assignment.  Neither
this Agreement nor any rights of the parties hereto may be assigned to any other
Person.

     

    Section
10.02 Termination.

     

    
      	
              (a)  

            	
              Unless
      earlier terminated as provided hereunder, this Agreement shall terminate
      automatically on the earliest of (i) the first day of the month next
      following the 24-month anniversary of the Effective Date, or (ii) the date
      on which the Investor shall have purchased Shares pursuant to Advances in
      the aggregate amount of the Commitment
Amount.

            


    

     

    
      	
              (b)  

            	
              The
      Company may terminate this Agreement effective upon fifteen Trading Days’
      prior written notice to the Investor; provided that (i) there are no
      Advances outstanding, and (ii) the Company has paid all amounts owed to
      the Investor pursuant to this Agreement.  This Agreement may be
      terminated at any time by the mutual written consent of the parties,
      effective as of the date of such mutual written consent unless otherwise
      provided in such written consent.  In the event of any
      termination of this Agreement by the Company hereunder, so long as the
      Investor owns any shares of Common Stock issued hereunder, unless all of
      such shares of Common Stock may be resold by the Investor without
      registration and without any time, volume or manner limitations pursuant
      to Rule 144, the Company shall not suspend or withdraw the
      Registration Statement or otherwise cause the Registration Statement to
      become ineffective, or voluntarily delist the Common Stock from the
      Principal Markets.

            


    

     

    
      
        
        

      

      
        -21-

        
          

        

      

      
        
        

      

    

     

    
      	
              (c)  

            	
              The
      obligation of the Investor to make an Advance to the Company pursuant to
      this Agreement shall terminate permanently (including with respect to an
      Advance Date that has not yet occurred) in the event that (i) there shall
      occur any stop order or suspension of the effectiveness of the
      Registration Statement for an aggregate of 50 Trading Days, other than due
      to the acts of the Investor, during the Commitment Period, or (ii) the
      Company shall at any time fail materially to comply with the requirements
      of Article VI and such failure is not cured within 30 days after receipt
      of written notice from the Investor, provided, however, that
      this termination provision shall not apply to any period commencing upon
      the filing of a post-effective amendment to such Registration Statement
      and ending upon the date on which such post effective amendment is
      declared effective by the SEC.

            


    

     

    
      	
              (d)  

            	
              Nothing
      in this Section 10.02 shall be deemed to release the Company or the
      Investor from any liability for any breach under this Agreement, or to
      impair the rights of the Company and the Investor to compel specific
      performance by the other party of its obligations under this
      Agreement.  The indemnification provisions contained in Article
      V shall survive termination
hereunder.

            


    

     

    Article
XI. Notices

     

    Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile, provided a copy is mailed by U.S. certified
mail, return receipt requested; (iii) 3 days after being sent by U.S. certified
mail, return receipt requested, or (iv) 1 day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same.  The addresses and facsimile numbers for
such communications, except for Advance Notices which shall be delivered in
accordance with Section 2.01(c) hereof, shall be:

     

    
      	
              If
      to the Company, to:

            	
              EnerJex
      Resources, Inc.

            
	 
      	
              Suite
      350, 27 Corporate Woods

            
	 
      	
              10975
      Grandview Drive

              Overland
      Park, KS  66210

            
	 
      	
              Attention:
      C. Stephen Cochennet

            
	 
      	
              Telephone:
      913-754-7754

            
	 
      	
              Facsimile:
      913-754-7755

            
	 
      	 
      
	
              With
      a copy to:

            	
              Law
      Office of Anthony N. DeMint

            
	 
      	
              1600
      Starside Drive

            
	 
      	
              Las
      Vegas, NV  89117

            
	 
      	
              Attention:
      Anthony N. DeMint, Esq.

            
	 
      	
              Telephone:
      702-586-6436

            
	 
      	
              Facsimile:
      702-442-7995

            


    

     

    
      
        
        

      

      
        -22-

        
          

        

      

      
        
        

      

    

     

    
      	
              If
      to the Investor(s):

            	
              Paladin
      Capital Management, S.A.

            
	 
      	
              Ocean
      Business Plaza #1506

              Ave.
      Aquilino De La Guardia YCL. 47

            
	 
      	
              Marbella
      Apartado Postal 0832-677

            
	 
      	
              Attention: Lidia
      Marliz Matos, Director

            
	 
      	
              Telephone: 507-264-0470

            
	 
      	
              Facsimile: 507-264-0471

            
	 
      	 
      
	
              With
      a Copy to:

            	
              Fabrega,
      Molino & Mulino

            
	 
      	
              Samuel
      Lewis Avenue, 53rd Street

            
	 
      	
              Omega
      Bldg.

            
	 	Panama
      City, Panama
	 
      	
              Telephone:
      507-263-5333

            
	 
      	
              Facsimile:
      507-301-6606

            


    

     

    Each
party shall provide 5 days’ prior written notice to the other party of any
change in address or facsimile number.

     

    Article
XII. Miscellaneous

     

    Section
12.01 Counterparts.  This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.  In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause 4 additional
original executed signature pages to be physically delivered to the other party
within 5 days of the execution and delivery hereof, though failure to deliver
such copies shall not affect the validity of this Agreement.

     

    Section
12.02 Entire
Agreement; Amendments.  This Agreement supersedes all other
prior oral or written agreements between the Investor, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement, and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters.  No
provision of this Agreement may be waived or amended other than by an instrument
in writing signed by the party to be charged with enforcement.

     

    Section
12.03 Reporting
Entity for the Common Stock.  The reporting entity relied upon
for the determination of the trading price or trading volume of the Common Stock
on any given Trading Day for the purposes of this Agreement shall be Bloomberg,
L.P. or any successor thereto.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting
entity.

     

    Section
12.04  Fees.

     

    
      	
              (a)  

            	
              Commitment
      Fee.  The Company shall pay to the Investor a commitment
      fee (the “Commitment
      Fee”) of 90,000 shares of Common Stock (such shares, the “Commitment
      Shares”). The Company will issue to the Investor the Commitment
      Shares within three days of the execution of this
    Agreement.

            


    

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

    

     

    
      	
              (b)  

            	
              Commitment
      Shares. Commitment Shares shall be deemed fully earned as of the
      date they are issued regardless of the amount of Advances, if any, that
      the Company is able to, or chooses to, request hereunder.  The
      Commitment Shares shall be included on any registration statement filed by
      the Company after the date hereof, unless such shares may be resold
      without any limitation pursuant to Rule 144.

            
	 	 
	
              (c)  
      
 	Due Diligence and Structuring
      Fee. The Company shall reimburse the Investor for reasonable
      out-of-pocket expenses including due diligence and legal costs. The amount
      of these expenses shall not exceed $30,000 without the prior consent of
      the Company. The Company shall pay $20,000 to the Investor towards these
      expenses upon the execution of this
Agreement.


    

     

    Section
12.05 Brokerage.  Each
of the parties hereto represents that it has had no dealings in connection with
this transaction with any finder or broker who will demand payment of any fee or
commission from the other party.  The Company on the one hand, and the
Investor, on the other hand, agree to indemnify the other against and hold the
other harmless from any and all liabilities to any person claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.

     

    Section
12.06 Confidentiality.  If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any information
obtained from any other party (except information publicly available or in such
party’s domain prior to the date hereof, and except as required by court order)
and shall promptly return to the other parties all schedules, documents,
instruments, work papers or other written information without retaining copies
thereof, previously furnished by it as a result of this Agreement or in
connection herein.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    


    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

    

     

    IN WITNESS WHEREOF, the
parties hereto have caused this Standby Equity Distribution Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.

     

    
      	 
      	
              COMPANY:

            
	 
      	
              EnerJex
      Resources, Inc.

            
	 
      	 
      
	 
      	
              By:
      /s/ C. Stephen
      Cochennet                                                                           

            
	 
      	
              Name:
      C. Stephen Cochennet

            
	 
      	
              Title:
      CEO/President

            
	 
      	 
      
	 
      	 
      
	 
      	
              INVESTOR:

            
	 
      	
              Paladin
      Capital Management, S.A.

            
	 
      	 
      
	 
      	
              By: /s/ Lidia Marliz
      Matos                                                                           

            
	 
      	
              Name:
      Lidia Marliz Matos

            
	 
      	
              Title:  Director

            


    

    


    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

     

    ADVANCE
NOTICE - ENERJEX RESOURCES, INC.

     

    The
undersigned, _______________________ hereby certifies, with respect to the sale
of shares of Common Stock of ENERJEX RESOURCES, INC. (the “Company”) issuable in
connection with this Advance Notice, delivered pursuant to the Standby Equity
Distribution Agreement (the “Agreement”), as
follows:

     

    1.           The
undersigned is the duly elected ______________ of the Company.

     

    2.           There
are no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment to
the Registration Statement.

     

    3.           The
Company has performed in all material respects all covenants and agreements to
be performed by the Company and has complied in all material respects with all
obligations and conditions contained in this Agreement on or prior to the
Advance Notice Date, and shall continue to perform in all material respects all
covenants and agreements to be performed by the Company through the applicable
Advance Date.  All conditions to the delivery of this Advance Notice
are satisfied as of the date hereof.

     

    4.           The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC
Filings”) required to be made by it pursuant to applicable securities
laws (including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q, 10-K, 8-K, etc.).  All
SEC Filings and other public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls, etc. (collectively,
the “Public
Disclosures”), have been reviewed and approved for release by the
Company’s attorneys and, if containing financial information, the Company’s
independent certified public accountants.  None of the Company’s
Public Disclosures contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

     

    5.           The
Advance requested is _____________________.

     

    6.           4.99%
of the outstanding Common Stock of the Company as of the date hereof
is  ___________.

     

    The
undersigned has executed this Certificate this ____ day of _______________,
200__.

     

    ENERJEX
RESOURCES, INC.

    


    By:   _______________________________                                                                

    Name:

    Title:

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

       

    

    Please
deliver this Advance Notice by mail or facsimile with a follow up phone call
to:

    


    Paladin
Capital Management

    Ocean
Business Plaza #1506

    Ave.
Aquilino De La Guardia YCL. 47

    Marbella
Apartado Postal 0832-677

    Facsimile:             (507)
264-0471

    


    Attention:  Lidia
Marliz Matos

    


    Confirmation
Telephone Number:  (507) 264-0470.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

    FORM
OF SETTLEMENT DOCUMENT

     

    VIA FACSIMILE &
EMAIL

    


    EnerJex
Resources, Inc.

    Attn:

    Fax:

    Email:

     

    
      	 
      	
              Below
      please find the settlement information with respect to the Advance Notice
      Date of:

            	 
      
	 
      	 
      	 
      
	
              1.

            	
              (a)
      Amount of Advance Notice (Shares):

            	 
      
	 
      	 
      
	
              (b)
      Shares due to Investor (after taking into account any adjustments pursuant
      to Section 2.01):

            	 
      
	 
      	 
      	 
      
	
              2.

            	
              Market
      Price:

            	
              $

            
	 
      	 
      	 
      
	
              3.

            	
              Purchase
      Price (Market Price X ___%) per share:

            	
              $

            
	 
      	 
      	 
      
	
              4.

            	
              Total
      Purchase Price due to Company (Purchase Price x Shares due to
      Investor):

            	
              $

            


    

    


    Please
issue the number of Shares due to the Investor to the account of the Investor as
follows:

     

    DTC/DWAC
Instructions

    Paladin
Capital Management, S.A.

    Blue
Trading, DTC Participant No.:  _____________

    Account
No.: _______________

     

    Sincerely,

     

    Paladin
Capital Management, S.A.

     

    


    Approved
By EnerJex Resources, Inc.:

    


    __________________________________

    Name and
Title:  

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

     

    PLAN OF
DISTRIBUTION

     

    The
selling stockholder of the common stock and any of its pledgees, assignees and
successors-in-interest (the “Selling Stockholder”)
may, from time to time, sell any or all of their shares of common stock on the
Nasdaq Global Market or any other stock exchange, market or trading facility on
which the shares are traded or in private transactions.  These sales
may be at fixed or negotiated prices.  A Selling Stockholder may use
any one or more of the following methods when selling shares:

    


    
      	
               
      

            	
              ●

            	
              ordinary
      brokerage transactions and transactions in which the broker dealer
      solicits purchasers;

            


    

    


    
      	
               
      

            	
              ●

            	
              block
      trades in which the broker dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            


    

    


    
      	
               
      

            	
              ●

            	
              purchases
      by a broker-dealer as principal and resale by the broker dealer for its
      account;

            


    

    


    
      	
               
      

            	
              ●

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            


    

    


    
      	
               
      

            	
              ●

            	
              privately
      negotiated transactions;

            


    

    


    
      	
               
      

            	
              ●

            	
              broker-dealers
      may agree with the Selling Stockholders to sell a specified number of such
      shares at a stipulated price per
share;

            


    

    


    
      	
               
      

            	
              ●

            	
              through
      the writing or settlement of options or other hedging transactions,
      whether through an options exchange or
  otherwise;

            


    

    


    
      	
               
      

            	
              ●

            	
              a
      combination of any such methods of sale;
or

            


    

    


    
      	
               
      

            	
              ●

            	
              any
      other method permitted pursuant to applicable
  law.

            


    

    


    The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other broker dealer to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in
compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

     

    In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume.  The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

     

    
      
        
        

      

      
        C-1

        
          

        

      

      
        
        

      

       

    

    Paladin
Capital is, and any other Selling Stockholder, broker-dealer or agent that are
involved in selling the shares may be deemed to be, an “underwriters” within the
meaning of the Securities Act in connection with such sales.  In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Each Selling
Stockholder has informed the Company that it does not have any written or oral
agreement or understanding, directly or indirectly, with any person to
distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed eight percent
(8%).

     

    The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     

    Because
Paladin Capital is, and any other Selling Stockholder may be deemed to be, an
“underwriter” within the meaning of the Securities Act, they will be subject to
the prospectus delivery requirements of the Securities Act including Rule 172
thereunder.  In addition, any securities covered by this prospectus
which qualify for sale pursuant to Rule 144 under the Securities Act may be sold
under Rule 144 rather than under this prospectus.  There is no
underwriter or coordinating broker acting in connection with the proposed sale
of the resale shares by the Selling Stockholders.

     

    We agreed
to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144 under the
Securities Act or any other rule of similar effect or (ii) all of the shares
have been sold pursuant to this prospectus or Rule 144 under the Securities Act
or any other rule of similar effect.  The resale shares will be sold
only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

     

    Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling Stockholders will be subject
to applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person.  We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities
Act).